Contract Form and Procurement Costs: The Impact of Compulsory Multiple Contractor Laws in Construction

28 Pages Posted: 1 Aug 2000 Last revised: 5 Oct 2010

See all articles by Orley Ashenfelter

Orley Ashenfelter

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

David Ashmore

Princeton University

Randall K. Filer

City University of New York, CUNY Hunter College - Department of Economics; Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute); University of Michigan at Ann Arbor - The William Davidson Institute; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: February 1997

Abstract

It is claimed that many regulatory rules enforce inefficiencies in order to achieve the appearance of cost control. We assess the importance of these claims by measuring the effect of New York state's compulsory multiple contractor law on the cost of public construction in New York City. Multiple contractor laws, which exist in many states, prohibit the use of general contractors in order to promote the appearance of competition. Contrasts of construction costs between buildings with identical blind cost estimates indicate that this law increases public construction costs by 8% and increases construction delays by more than a calendar year.

Suggested Citation

Ashenfelter, Orley C. and Ashmore, David and Filer, Randall K., Contract Form and Procurement Costs: The Impact of Compulsory Multiple Contractor Laws in Construction (February 1997). NBER Working Paper No. w5916. Available at SSRN: https://ssrn.com/abstract=225697

Orley C. Ashenfelter (Contact Author)

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
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National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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David Ashmore

Princeton University ( email )

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Randall K. Filer

City University of New York, CUNY Hunter College - Department of Economics ( email )

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Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

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University of Michigan at Ann Arbor - The William Davidson Institute

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CESifo (Center for Economic Studies and Ifo Institute)

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